US President Donald Trump criticized the World Bank (WB). According to the American leader, the organization should not provide financial support to China.

“Why is the World Bank lending to China? How is this possible? China has a lot of money, and when not, it creates it. Enough! ”He wrote on his Twitter.

Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don't, they create it. STOP!

- Donald J. Trump (@realDonaldTrump) December 7, 2019

Critical remarks by the American president appeared after the publication of a credit plan for China until fiscal year 2025, adopted by the WB in November. According to CNBC, the World Bank’s board of directors approved a plan by which the PRC could annually borrow from $ 1 billion to $ 1.5 billion at a low interest rate, despite objections from US officials.

Recall that the World Bank is an international financial organization headquartered in Washington, providing assistance to developing countries. Its stated goal is to contribute to globalization, sustainable development of the world.

Each of the 189 countries that make up this organization makes annual contributions under special quotas. The role of the country in the formation of the governing structures of the World Bank depends on the contribution of a state to the authorized capital. The USA has the largest share in the authorized capital of the organization - 16.36%. Thus, Washington has great potential in order to determine its policy, but cannot ban the issuing of loans to any country.

In February 2019, Donald Trump nominated U.S. Deputy Treasury Secretary David Malpass to serve as president of the World Bank. In April, his candidacy was approved by the Board of Executive Directors of the organization. Prior to that, Malpass served as US Under Secretary of the Treasury and regularly criticized the World Bank for granting loans to China.

Recall that the PRC and the USA have been waging a trade war for about a year. The agreement, which should put an end to it, is now being discussed, but it is still far from the final conclusion of the transaction. On the contrary, the confrontation between the two countries has shifted to the political plane: the United States and China impose sanctions against each other in connection with the unrest in Hong Kong. Washington accuses Beijing of violating human rights in this autonomous region of the People's Republic of China, Beijing, in turn, claims that the Americans are interfering in the internal affairs of the country.

Part of the sanctions war

Experts believe that the World Bank will not refuse to finance China in the near future and the American president understands this.

According to Alexander Schelkanov, assistant professor of banking and innovative financial technologies, Trump’s statement is “a short-term stuffing” and refers to the category of statements of politicians who “lead to speculative lowering and increasing quotes of certain industries”.

“Since April 2018, the United States has been taking a focused course to change the credit policy of the World Bank, so the organization will heed the opinion of Trump, but not immediately. The World Bank will not stop financing China for those programs that are planned. However, in the long run, the United States may well make him do it, ”he said in an interview with RT.

  • China, active in construction, needs loans
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  • © Xing Guangli

Alexei Portansky, a leading researcher at IMEMO RAS, also believes that there will be no immediate cessation of China's funding from the World Bank. In a commentary on RT, he noted that although the United States is one of the main shareholders of this organization, it pursues a generally independent policy.

“Therefore, it would be wrong for her to listen to such clear political demands, even of the US president. Most likely, the World Bank will proceed from its considerations, ”said Portansky.

However, the expert does not believe that the termination of China's financing by the World Bank will have any critical consequences for the economy of this country.

“The fact is that this organization is engaged in supporting projects in specific industries in accordance with its program. She does not provide direct assistance to the state, ”explained Portansky.

In addition, the expert emphasizes that $ 1.5 billion is not such a big amount for China. According to the Ministry of Finance of this country, only the budget expenditures of the PRC in 2018 amounted to $ 3.267 trillion.

At the same time, Shchelkanov believes that China's external financing is a factor that contributes to increased economic competition between this country and the United States. Therefore, Trump is not interested in the fact that China receives even minimal support from the World Bank.

The damage that China’s confrontation with the United States has already caused should not be underestimated, Shchelkanov said, adding that "now China is devaluing the renminbi in response to the trade wars."

The fact that Washington is trying to use international structures to put pressure on China indicates a deepening economic conflict between the two countries, experts say.

Harbinger of Worsening Situation

Alexander Shchelkanov recalls that with the advent of Trump, the United States headed for protectionism and the destruction of old chains in world trade. Consequently, the American leader is ready to take risky and even revolutionary steps.

  • The confrontation between China and the United States is becoming global
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“Trump’s goal is to inflict maximum damage on the Chinese economy, thereby supporting the American economy in this way,” he explained.

Alexey Portansky agrees with this point of view.

“Trump, talking about the trade deficit of the two countries, for which China is allegedly responsible, wants to weaken Beijing so as not to give him the opportunity to become economic leader in the next 15-20 years,” the expert said.

The next step in the confrontation between China and the United States, analysts believe, may be attempts to internationalize the confrontation, to connect new countries to it. However, it is not yet clear who exactly will support Washington’s anti-Chinese course, Shchelkanov notes. In his opinion, it all depends on the economic situation: not all US allies will be able to afford to introduce increased duties on certain Chinese goods.

“There is an opinion that a sharp economic recession is expected in the eurozone, to which each country will respond in its own way,” the expert said.

However, it can be confidently predicted that the US will put forward political claims against China in an attempt to isolate this country to the maximum extent on the world stage, analysts say.

“The US has already prepared a bill that would impose sanctions against Chinese officials for violating the rights of Muslim minorities. Most likely, pressure on China on non-trade issues will only increase. And China will take retaliatory measures. Of course, this will strengthen the confrontation, ”said Shchelkanov.

However, it is possible that the trade war with China, which is becoming increasingly global in nature, may unexpectedly end. This will happen if Trump is defeated in the US presidential election in 2020, Portansky believes.

“If the representative of the Democratic Party becomes the head of state, the relations between the two countries will undergo serious changes. For example, if Michael Bloomberg suddenly wins, on the initiative of which a summit is being held for the second year in a row, where important issues related to the relationship between the economies of these two countries are being discussed, then relations between the countries will certainly improve, ”Portansky concluded.